As Featured In

10 Things Every Aspiring Homeowner Needs To Know

Buying a house or condo is equal parts exciting and stressful. It’s easy to get carried away thinking about actually owning a home of your own, not to mention all the barbecues you’ll have in the back yard.

There are many questions that come up when you are considering buying your first property. Make sure you ask yourself the following before taking the leap.

You need to know:

Whether you should really be buying, or if you should stick with renting

What your credit situation looks like to lenders

How much house you can really afford (Hint: It’s not the number your lender will give you)

How to pick a lender, and whether you need to get pre-qualified

How to pick a realtor, or if you should do it yourself

Which mortgage is best for you

What goes into an offer and the next steps

How to budget for closing costs

What happens at closing

Whether to pay for movers or do it yourself

Today’s post will focus on two things: How to know if you’re ready to stop renting and become a homeowner, and how to figure out what your credit looks like to a lender.

Should I buy or should I rent?

Buying a house might be part of the American Dream, but as many people found out over the last 10 years, it can also become a nightmare if you aren’t prepared. When you’re deciding whether to make the jump to homeownership, you have to ensure you’re doing it for the right reasons. This handy calculator from MSN Money can give you a general idea of whether you should buy or rent your home.

Additionally, you should ask yourself the following questions when deciding whether to rent or buy:

Are you planning on switching jobs in the next year or two? Could that include relocating? Due to the high transactional costs of buying and selling a home, you should usually plan on being there for a least three years or more.

Is it cheaper to rent than to buy in your area? If a 1,000 square-foot place costs $950 a month to rent, and a mortgage would end up costing $1,300 a month, it may make sense to keep renting and invest that money somewhere else.

Do you have enough saved up to have an emergency savings fund (three to six months of expenses) AND a downpayment of 20% plus closing costs (usually around 3% of your purchase price)?

Are you ready to take on the weekly, monthly and yearly responsibilities of homeownership? If you have a yard, you need to be able to maintain it by mowing and controlling weeds. If your house is painted, you may have to paint it or pay for it to be painted every few years.

Are you moving somewhere new? If you are moving to a new city, it could be wise to rent for six months or a year to give you time to get familiar with the different areas in town. You wouldn’t want to end up in a neighborhood that all of the locals know is downwind of the sewage treatment plant!

If you know you are going to be in one place for a while, you are familiar with the different areas of your city, and you know that you are going to love (or at least tolerate) the home maintenance, you should proceed to step 2 of the homebuying process.

What does your credit situation look like to lenders?

It is critical that you understand your credit situation well before you involve a lender. If you haven’t pulled your credit score in a while, check out Credit Karma to get your TransUnion score.

Pay close attention to the “Credit Report Card” for an explanation of how you are doing in different areas, like how much of your credit line you are using and how many accounts you have open.

You can also pull full credit reports from each of the three credit bureaus at annualcreditreport.com. (You get one free credit report per year from each bureau, so pulling one once every four months is a good strategy.) If there is anything on there that doesn’t look right, spend the time now to dispute the error.

Stay tuned for more of the information you need to know when buying a home.

About Katie

Get Started

Katie is a Proud Member of …

Explore the Blog

My Tweets

Connect with Your Richest Life

Katie Brewer, CFP® is a Dallas, Fort Worth, and online fee-only financial planner with over 10 years of experience. Her passion is helping clients get their financial lives in order to start living their richest lives.

Disclosures and Forms

This site is published for residents of the United States only. Your Richest Life may only conduct business with residents of the states and jurisdictions in which Your Richest Life is properly registered. Therefore, a response to a request for information may be delayed until appropriate registration is obtained or exemption from registration is determined. Not all of the services referenced on this site are available in every state and through every advisor listed.

This webpage offers direct access or ‘links’ to other Internet websites. These sites contain information that has been created, published, maintained or otherwise posted by institutions or organizations independent of Your Richest Life, LLC. Your Richest Life, LLC does not endorse, approve, certify or control these websites and does not assume responsibility for the accuracy, completeness or timeliness of the information located there. Visitors to these websites should not use or rely on the information contained therein until consulting with an independent finance professional.